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Taxation of Sole Traders in Bulgaria

The tax regime for ST is governed by the Income Taxes on Natural Persons Act (ITNPA) and the Corporate Income Tax Act (CITA). The Corporate Income Tax is applied to determine which ST income is subject to taxation. For all other aspects of taxation: tax rate, deadline for declaration and payment, procedures, etc., ITNPA applies.

The taxable income does not include income generated by activities:

  • Subject to alternative taxes under CITA;
  • Subject to patent tax under the LTFA;

Bulgarian tax law allows the sole trader to use their personal property as a natural person (incl. belongings in MPC, but not in co-owned property) for their business activity as a sole trader. In this case the sole trader has to enter them in their accounting for tax purposes at their acquisition cost.

This taxable income is reduced by:

  • Contributions which the self-insured person has to make on their own account for social and health insurance;
  • Mandatory insurance contributions, deposited abroad, which are at the expense of the natural person;
  • Certain percentage of the personal contributions for additional voluntary insurance incurred during the calendar year;
  • Tax reliefs under this Act;

The amount of the tax is 15% on the basis of taxation under Article 48 (2) of ITNPA. The sole trader must submit a tax return no later than 30 April of the year subsequent to the year during which the income was received, the deadline for payment of the tax is also 30 April of the year subsequent to the year in the course of which the income was received. It is submitted at the territorial directorate of the National Revenue Agency by the residential address of the sole trader. The declaration must be submitted along with an annual business report. The latter does not apply to persons who have not been active and have not reported any income and accounting costs.

Sole traders are required to make advance payments under the terms provided in CITA.

Bulgarian tax law provides for an opportunity to benefit from a discount on the payment (5%) of the tax due, if the tax declaration is submitted electronically and the tax is paid until 30 April or if the tax declaration is submitted and the tax is paid not later than February 10th . The discount is applicable only for persons with no public debt recovery procedures against them.